The Board of Directors of BNP Paribas met on 27 October 2016. The meeting was chaired by Jean Lemierre and the Board examined the Group’s results for the third quarter 2016.

GOOD RESULTS AND SOLID CAPITAL GENERATION

BNP Paribas reported a good overall performance this quarter, demonstrating the strength of its integrated and diversified business model even in the low interest rate environment.

Revenues totalled 10,589 million euros, up by 2.4% compared to the third quarter 2015. They included this quarter the exceptional impact of -202 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA) (+37 million euros in the third quarter 2015).

The revenues of the operating divisions grew well (+4.8% compared to the third quarter 2015): they were stable at Domestic Markets (1) (+0.1%) despite the low interest rate environment, up by 3.9% at International Financial Services and were up strongly at CIB (+13.2%).

At 7,217 million euros, operating expenses were up by 3.7% compared to the third quarter 2015. They included the exceptional 37 million euro impact (34 million euros in the third quarter 2015) of the acquisitions (2) restructuring costs as well as the CIB transformation plan’s costs for 216 million euros in relation with the rapid implementation of the transformation of this operating division (0 in the third quarter 2015). They no longer included any Simple & Efficient transformation costs (126 million euros in the third quarter 2015): in line with the target, the final costs related to this plan were booked in the fourth quarter 2015.

Operating expenses rose by 1.6% for Domestic Markets (1), 3.4% for International Financial Services and 3.5% for CIB. They included the impact of new regulations as well as the effects of business growth in some activities but benefited from the success of the Simple & Efficient savings plan, which offset the natural costs’ drift.

The gross operating income of the Group was thus down by 0.5%, at 3,372 million euros. It was up by 8.8% for the operating divisions.The cost of risk was down by 13.4% due in particular to the good control of risk at loan origination, the low interest rate environment and the continued improvement recorded in Italy. It came to 764 million euros (882 million euros in the third quarter 2015) or 43 basis points of outstanding customer loans.

Non-operating items totalled +172 million euros (+163 million euros in the third quarter 2015).

Pre-tax income thus came to 2,780 million euros compared to 2,669 million euros in the third quarter 2015 (+4.2%). It was up by 15.2% for the operating divisions.Net income attributable to equity holders totalled 1,886 million euros, up by 3.3% compared to the third quarter 2015. Excluding exceptional items (3), it came to 2,192 million euros (+15.0%).

As at 30 September 2016, the fully loaded Basel 3 common equity Tier 1 ratio (4) totalled 11.4%, up by 30 basis points compared to 30 June 2016, illustrating the solid capital generation. The fully loaded Basel 3 leverage ratio (5) came to 4.0% (stable compared to 30 June 2016).

The Liquidity Coverage Ratio stood at 127% as at 30 September 2016. Lastly, the Group’s immediately available liquidity reserve totalled 326 billion euros (compared to 291 billion euros as at 30 June 2016), equivalent to over one year of room to manoeuvre in terms of wholesale funding.

The net book value per share reached 73.1 euros, equivalent to a compounded annual growth rate of 6.2% since 31 December 2008, illustrating the continuous value creation throughout the cycle.

The Group is actively implementing the remediation plan agreed as part of the comprehensive settlement with the U.S. authorities and is continuing to reinforce its compliance and control procedures.

For the first nine months of the year, at 32,755 million euros, revenues were up slightly (+0.8% compared to the first nine months of 2015) despite persistently very low rates and a particularly unfavourable environment in the first quarter of the year. They included the exceptional impact of +597 million euros of the capital gain from the sale of Visa Europe shares as well as the -41 million euros in Own Credit Adjustment (OCA) and own credit risk included in derivatives (DVA) (+154 million euros in the first nine months of 2015).

The revenues of the operating divisions held up well compared to the first nine months of 2015 at Domestic Markets (6) (-0.4%), rose at International Financial Services (+0.5%) and were down by 2.8% at CIB due to the particularly challenging market environment in the first quarter of the year.

Operating expenses, at 21,934 million euros, rose by only 0.4% compared to the first nine months of 2015. They included the exceptional impact of the acquisitions’ restructuring costs (7) and CIB transformation plan’s costs for a total of 407 million euros (507 million euros in the first nine months of 2015). They no longer included any Simple & Efficient transformation costs (390 million euros in the first nine months of 2015).

Operating expenses rose by 2.0% for Domestic Markets1 and 1.9% for International Financial Services but were down by 1.3% for CIB in connection with lower business in the first quarter. Pursuant to the IFRIC 21 “Levies” interpretation (8), they included the entire amount of the increase in 2016 of banking taxes and contributions. They also factored in the implementation of new regulations and the reinforcement of compliance but benefited from the success of the Simple & Efficient savings plan, which offset the natural costs’ drift.

The gross operating income of the Group rose by 1.7%, to 10,821 million euros. It was down by 3.5% for the operating divisions.

The cost of risk was significantly lower (-18.3% compared to the first nine months of 2015) due in particular to the good control of risk at loan origination, the low interest rate environment and the improvement recorded in Italy. It came to 2,312 million euros (2,829 million euros in the first nine months of 2015).

Non-operating items totalled +434 million euros (+1,094 million euros in the first nine months of 2015 due to the exceptional +364 million euro impact of the capital gain from the sale of a 7% stake in Klépierre-Corio, a +123 million euro dilution capital gain from the merger between Klépierre and Corio and a +94 million euros capital gain from the sale of a non-strategic stake).

Pre-tax income thus came to 8,943 million euros compared to 8,906 million euros in the first nine months of 2015 (+0.4%). It was slightly down (-0.4%) for the operating divisions.

Net income attributable to equity holders was 6,260 million euros, up by 3.8% compared to the first nine months of 2015. Excluding exceptional items (9), it came to 5,989 million euros (+4.1%).

The annualised return on equity, excluding exceptional items equalled 9.8% (+60 basis points compared to the whole of 2015 [10]). The annualised return on tangible equity, excluding exceptional items was 11.7% (+60 basis points compared to the whole of 2015 [10]). The annualised return on equity excluding exceptional items and calculated on the basis of a CET1 ratio of 10% stood at 10.7%, in line with the target set out in the 2014-2016 plan.

(1) Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)
(2) LaSer, Bank BGZ, DAB Bank and GE LLD
(3) Effect of exceptional items after tax: -306 million euros in the third quarter 2016, -80 million euros in the third quarter 2015
(4) Ratio taking into account all the CRD4 rules with no transitory provisions
(5) Ratio taking into account all the rules of the CRD4 at 2019 with no transitory provisions, calculated according to the delegated act of the European Commission dated 10 October 2014
(6) Including 100% of Private Banking in the domestic networks (excluding PEL/CEL effects)(
(7) LaSer, Bank BGZ, DAB Bank and General Electric LLD
(8) Booking in the first quarter of the full amount of banking taxes and contributions for the year
(9) Effect of exceptional items after tax: +272 million euros in the first nine months of 2016, +278 million euros in the first nine months of 2015
(10) Effect of exceptional items after tax in 2015: -644 million euros